Check if you have to pay the higher rates of Stamp Duty Land Tax (SDLT) when you buy a residential property in England or Northern Ireland.
You must pay the higher SDLT rates when you buy a residential property (or a part of one) for £40,000 or more, if all the following apply:
- it will not be the only residential property worth £40,000 or more that you own (or part own) anywhere in the world
- you have not sold or given away your previous main home
- no one else has a lease on it which has more than 21 years left to run
There are certain circumstances when the higher rates do not apply.
Who the higher rates apply to
You may have to pay the higher rates even if you intend to live in the property you’re buying (and regardless of whether or not you already own a residential property).
This is because the rules do not apply only to you (the buyer), but also to anyone you’re married to or buying with.
If you’re married or in a civil partnership
The rules apply to you both as if you were buying the property together, even if you’re not.
If either of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole (unless you’re permanently separated).
Buying with someone else
The rules apply to each person (and their spouse) who is buying the property.
If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole.
If you’re buying as a trustee
The rules may apply to the beneficiary of the trust and not to you, depending on the type of trust it is.
What property the higher rates apply to
When you know who the rules apply to, you should work out how many residential properties each of you will own at the end of the day of your new purchase.
If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).
Include any residential property that:
- is owned on behalf of children under the age of 18 (parents are treated as the owners even if the property is held through a trust and they are not the trustees)
- you have an interest in as the beneficiary of a trust
Include your current home, if you still own it at the end of the day you buy your new home.
The higher rates
|up to £125,000||3%|
|over £125,000 to £250,000||5%|
|over £250,000 to £925,000||8%|
|over £925,000 to £1.5 million||13%|
|over £1.5 million||15%|
You will pay the higher rates on everything you give for the purchase, this is called the ‘consideration’.
When the higher rates do not apply
The higher rates do not apply to certain people, property and transactions.
Do not include anyone who will both:
- use your new property as their main home
- have sold or given away the last main home they owned before you buy your new home (or on the same day)
Do not include property (or part of a property) if any of the following apply:
- the property is worth less than £40,000
- it’s a mixture of residential and non-residential (like a shop with a flat above it)
- it’s ‘moveable’ like a caravan, houseboat or mobile home (unless it has become a permanent fixture)
The rules also do not apply to property you lease if either:
- your lease is for 7 years or less (on the date it was granted)
- the lease is owned by someone else and it has more than 21 years left
If you’re transferring ownership (or part ownership) of a residential property to your spouse, the higher rates do not apply as long as no one else is involved in the transfer.
If you want to increase the amount of a property that you already own, you do not have to pay the higher rates when all the following apply:
- you already own 25% or more
- the dwelling has been your only or main home for the previous 3 years
- (if you’re extending a lease) your lease still has 21 years or more left to run
Reliefs you may qualify for
You may qualify for a ‘relief’ that reduces the amount of SDLT you have to pay, for example multiple dwellings relief.
Check what reliefs are available.
If you’re buying 6 or more properties, you can choose to pay either the:
- non-residential rates of SDLT (not the higher rates)
- higher rates using multiple dwellings relief
What you need to do
Send your return
Your SDLT return must be sent to HMRC within 14 days of the ‘effective date’ of the purchase.
Pay your bill
You can pay your SDLT bill as soon as your return has been sent to HMRC.
When and how to get a refund
If you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.
You cannot get a refund if:
- you or your spouse still own any part of your previous home
- the higher rates still apply to you for another reason
Properties sold on or before 28 October 2018
If you sold your previous main residence on 28 October 2018 or earlier, a refund must be claimed within either:
- 3 months of the sale of the previous main residence
- 12 months of the filing date of the SDLT return relating to the new residence, whichever comes later
Properties sold on or after 29 October 2018
If you sold your previous main residence on 29 October 2018 or later, a refund must be claimed within 12 months of either the:
- sale of the previous main residence
- filing date of the SDLT return relating to the new residence, whichever comes later
Trusts, companies and partnerships
If you’re a trustee buying on behalf of a bare trust, the beneficiary of the trust will be treated as the buyer.
The beneficiary will also be treated as the buyer if a trust holds property and the beneficiary is entitled to any of the following:
- occupy the property for life
- receive income from the property
If the beneficiary is under 18, the child’s parents are treated as the buyers (even if they are not the trustees) unless the child is covered by the Mental Capacity Act 2005 or the Mental Capacity Act (Northern Ireland) 2016.
You (the trustee) will be treated as the buyer if it either:
- is not a bare trust
- does not give the beneficiary a right to occupy a property for life or receive income from it
If a trustee buys a property but none of the above apply (for example it’s a discretionary trust), the purchase is treated as if it were made by a company rather than an individual.
Companies must pay the higher rates for any residential property they buy if the:
- property is £40,000 or more
- interest they buy is not subject to a lease which has more than 21 years left
If the property costs more than £500,000, the 15% higher threshold SDLT rate for corporate bodies may apply instead.
You have to pay the higher rates if your partnership already owns a residential property and you purchase another residential property for your partnership.
If you’re a partner but are buying on your own behalf, the rules do not apply to the other partners unless they are your spouse.
You will not have to pay the higher rates if you buy a property for yourself and your only additional properties are used for your partnership’s trade.
More detailed information is available in HMRC’s Stamp Duty Land Tax manual about:
- what is a ‘dwelling’
- when 2 or more properties count as one
- what is a main residence
- what ‘disposing of your main residence’ means
- if you’re divorced or permanently separated
- buying more than one property
- if you have no beneficial ownership in a property
- inherited property
Agents can also catch up with the latest available webinar on the higher rates of Stamp Duty land Tax from 14 August 2018.